How Safe Is Online Banking? 4 Things To Know…
- How safe is online banking?
- Benefits of banking online
- What is the most secure way to do online banking?
- How safe is online banking on a mobile phone?
- How can Spiral help?
- Key Takeaways
How safe is online banking?
In the news, we’re often hearing about the dangers of conducting business online and tips on how we can protect our accounts from hackers.
Recent advancements in encryption have increased both the safety and convenience of online and mobile banking making them extremely secure.
Today, over 73% of Americans access their banking information online or through an app.Tweet
To start, what exactly is online banking? For the purposes of this information, we are discussing both:
According to Bankrate, an online bank is defined as, “a bank that typically doesn’t have any physical locations. Without a brick-and-mortar presence, online banks can save on the traditional expenses that go along with operating a branch.
This is how online banks can offer such competitive annual percentage yields (APYs).”
More general online banking:
Online banking can be any institution that “allows a user to conduct financial transactions via the Internet. Online banking is also known as Internet banking or web banking.
Online banking offers customers almost every service traditionally available through a local branch including deposits, transfers, and online bill payments.
Virtually every banking institution has some form of online banking, available both on desktop versions and through mobile apps.” (Source: Investopedia)
As always, there are precautions you can put into place to make sure your information stays as secure as possible.
Below, you’ll see some tips on safeguarding your personal information. First, let’s take a look at the benefits of online banking.
Benefits of banking online
Even 20 years ago, the thought of depositing a physical check just by taking a photo on your phone seemed… impossible? Now almost every transaction can occur on your desktop, laptop, tablet, or phone.
What we’re missing out on with those Cream Soda Dum Dum lollipops we’d get when we tagged along with Mom to the bank once a week, we’re making up for with convenience.
A few of the main benefits that come with online banking and online-only banks include:
We can now access our financial information 24/7. If we’re out grabbing drinks with friends the night before payday and we might be a little low in our checking (whoops!), we can now easily pop into our banking app and confirm we can get another shot of Fernet.
Additionally, it’s never been easier to transfer money, whether through mobile deposits or automatic bill pay, than due to the advancements of online banking.
Instead of the laborious task of physically balancing a checkbook every month, we can quickly see when and how much each transaction is.
Many banking sites and apps have a helpful way to let you know about important account updates. They can include:
- If your balance dips below a certain amount
- If a check you wrote has been cashed
- If a transfer you requested has gone through
- If a new device has logged into your account
- If your recent statement is ready to view
With these types of notifications, you often are able to easily lock and unlock access to your accounts, like with a linked debit or credit card.
3. Immediate transfers:
When you only use a physical bank, the process of transferring your own money to another one of your own bank accounts can seem Herculean.
With online banking, it’s as simple as a quick click on most home pages and indicating how much and when you’d like the transfer to be complete.
If the transfer is between two accounts at the same bank, the transfer is often instant.
4. Higher interest rates and lower fees:
Particularly at online-only banks, you’ll likely enjoy the benefits of lower overhead costs on these types of accounts.
The bank rewards you with higher interest rates on your checking and savings accounts/CDs/etc. and accounts with lower or no monthly maintenance fees.
Sometimes bigger, traditional brick-and-mortar banks may also offer online-only specific accounts that can mimic the benefits of online-only banks.
Many of these accounts also have programs with ATMs where you can withdraw your money with no ATM fees (or they may offer a reimbursement of ATM fees at the end of the month up to a certain amount).
What is the most secure way to do online banking?
While the benefits and convenience likely will outweigh the potential cons for you, security is something that should be kept in mind as you decide whether or not to engage in online banking activities.
Most banks have what is referred to as 256-bit encryption. According to Alarm New England, this banking industry standard, “refers to the exponent that represents the incredibly vast possible encryption combinations that your financial institution data has been coded with.
This means that there is an indescribable number of possible encryption combinations that a hacker would need to go through in order to crack the code.”
As always, stay vigilant and make sure that your banking institution uses high-level encryption.
New banking¹ service Spiral goes even further with military grade encryption – RSA 2048 bit. According to Quintessence Labs, “It would take a classical computer around 300 trillion years to break a RSA-2048 bit encryption key.”
Even still, we all want answers to the question of “How do I protect my online banking?” Forbes provides some helpful tips we can all follow to stay safe with our banks online. They include:
1. Choose Strong and Unique Passwords:
- Choose longer passwords, such as a phrase rather than a single word.
- Use a mix of upper and lowercase letters.
- Include numbers and special characters.
- Avoid common sequences, such as “1234.”
- Avoid using personal information, such as your name, pets’ names, date of birth, etc.
- Don’t store your login details in your online banking or mobile app.
2. Enable Two-Factor Authentication If Your Bank Offers It
“It allows you to add a second layer of security verification to log in to your online or mobile banking account. First, you enter your login name and password; then, you have to pass a second security test.
For example, you may need to enter a special code, verify your account through an automated phone call or identify a preselected image.
This can make it harder for a hacker or identity thief to unlock your account.”
3. Steer Clear of Public Wi-Fi
“If you do have to use the internet to access online banking while you’re in a public place, there are a few things you can do to help stay secure. These include disabling public file sharing and sticking with sites that are encrypted.
An easy way to check for encryption is to look for “https” in the site’s URL, which also triggers the lock icon to the left of the URL in your browser. Your laptop or mobile device’s firewall may automatically flag sites that are deemed unsafe for you.”
4. Sign Up for Banking Alerts
Not only are banking alerts convenient, they also help to make online banking more secure, “The kinds of alerts you may want to set up include notifications for new credit and debit transactions, failed login alerts, password change alerts and outgoing wire transfer alerts.
For example, if an identity thief is attempting to log in to your account, you’ll be notified right away.” (Source)
How safe is online banking on a mobile phone?
Believe it or not, according to Bankrate, “Some banks that have multi-factor authentication on their mobile apps don’t provide the same capability on their websites.
Well-designed mobile apps don’t store any data, and you’re less likely to hear about a virus on a smartphone.”
Your mobile app may likely be more secure than access that same information on the bank’s website.
A big reason for this is because of the extra layers of authentication apps normally have. While a banking website requires a log-in using a username/email and password and possibly a text or call with a log-in code, an app likely will have a biometric authentication layer to it.
Some banking apps connect to the facial recognition on your phone and you have to show your face to see your balances!
Additionally, if your phone is password protected, you are personally adding an extra layer of security that your laptop or desktop browser may not have.
How can Spiral help?
At Spiral, your security is our top priority. We keep your data and money secure at all times with military grade encryption – RSA 2048 bit. We also provide debit card control through the ability to lock and unlock your debit card.
More than just our extensive security practice, Spiral wants to help you do more with your money.
- Give effortlessly to 1 million+ charities²: Build your giving portfolio and explore amazing new causes to donate to.
- Get your donations matched dollar-for-dollar, up to $150 per year³. Make your giving go further!
- Track donations for tax returns: The Spiral mobile app tracks all your donations so you can easily see who you’ve given to, and how much.
- No minimum balance required.
- No monthly fees⁴ and no fees for transferring money.
- Peace of mind—All Spiral bank accounts are issued by nbkc bank, Member FDIC and insurance of accounts of up to $5,000,000 is available.⁵
While online banking and mobile-only banks are often transparent and leaders in the field of information security, there are always measures that we can take as individuals to protect our information.
You want to make sure that your online banking rituals are safe. So do we. At Spiral, we take extra precautions to make sure your money and personal information is secure.